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SCC decision broadens constructive dismissal

In the field of labour law it is assumed that there is a contract
between employee and employer, whether real or implied, and that as long
as both parties abide by the terms of the agreement, they have the
right to pursue their own interests. As a result, employers have always
enjoyed a certain leeway in dealing with workers.

Now the Supreme Court of Canada has released a decision that may have significant repercussions for employers.

The
March 6 ruling regarding David M. Potter v. New Brunswick Legal Aid
Services Commission, “is a very big decision because it gives employers a
warning that they’ve got to be upfront and transparent with employees,”
says Pete Mockler, a lawyer representing the plaintiff. “They can’t
take advantage of them. They can’t be secretive and hide when they
really intend to do.”

The facts of the case are straightforward. The
plaintiff, David Potter, was appointed head of the New Brunswick Legal
Aid Services Commission. Partway through his term, disagreements arose
and the two sides began negotiating a buyout of Potter’s contract. But
before a deal was reached, Potter took sick leave. Unbeknownst to
Potter, the commission sent a letter to the provincial justice minister
advising that Potter’s employment should be terminated. At the same time
the commission wrote to Potter telling him not to return to work until
further notice. Before the end of Potter’s sick leave, the commission
indefinitely suspended him with pay.

Potter took this to mean that he
had been let go and filed suit against the commission, alleging
constructive dismissal. The commission took the position that the law
suit represented voluntary resignation; both the trial judge and the
court of appeal agreed.

The key issue for the Supreme Court was the commission’s behaviour toward Mr. Potter after he went on sick leave.

In
overturning decisions by the trial judge and court of appeal, the
Supreme Court found that putting Potter on administrative leave was a
unilateral breach of contract of sufficient seriousness to constitute
constructive dismissal.

“I think this is the first time the [Supreme
Court] has said that an employee is not only entitled to get paid but he
is also entitled to fulfill the functions [of his job],” said Clarence
Bennett, a lawyer at Saint John, New Brunswick-based Stewart McKelvey who represented the commission.

Mr.
Bennett believes that the decision has major implications because it
imposes on employers “an implied contractual obligation not to withhold
work from employees without justification.”

“This changes the
previous tradition in common law with respect to constructive dismissal
[and] the court itself refers to this,” says Joshua Concessao, a lawyer
at Hicks Morley in Toronto.

Essentially, the traditional position was
that while employers have an obligation to retain an employee, there
was no obligation to supply work. But what the court says now, argues
Concessao, is that every employee derives meaning from the work they
perform, so under no circumstances is an employer permitted to impose an
indefinite suspension unless it can point to a legitimate business
reason.

Chris Paliare,
a lawyer at Paliare Roland Rosenberg Rothstein LLP, says he doesn’t think the
judgement was by any stretch revolutionary. Instead, it reflects how the
concept of constructive dismissal has “evolved” over the past 10 years,
making it “more difficult [for lawyers] to give people advice.”